2023 (11) TMI 1308 - AAR - GST

Maintainability of Advance Ruling application - Liability of sub-lessor liable to charge and pay GST on electricity charged, when sub-lessor charges electricity in additional to rent as per sub-lease agreement for immovable property rented to the tenant based on reading sub-meter - Can electricity charges paid by sub-lessor to the supplier of electricity for electricity connection in the name of the landlord and recovered based on sub-meters from different tenant be considered as amount recovered based on sub-meters from different tenant be considered as amount recovered as pure agent of the tenant when the legal liability to pay electricity bill to supplier of electricity is that of landlord? - Can the advance ruling be effective from beginning of the rent agreement date? HELD THAT - The applicant in the present proceeding is neither a supplier of the goods/service nor is the ruling sought on Input Tax Credit in respect of the supply received by the applicant, who as is mentioned supra is seeking to ascertain the liability of his supplier i.e. sub-lessor in the present case. A conjoint reading of the Sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under Section 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7 seven issues listed in Section 97(2), ibid, further, in terms of Section 103, such a ruling shall be binding only on the applicant and on the concerned officer or the jurisdictional officer, in respect of the applicant. The applicant is not the supplier of the service and that the ruling sought is not for admissibility of input tax credit in respect of supply received by the applicant. This being the factual matrix, the applicant has no locus standi in seeking a ruling in the facts of the present case. The aforementioned application stands rejected in terms of Section 98(2) of the CGST Act, 2017 read with Sections 95(a), (c), and 103 of the CGST Act, 2017.

Summary

Issues:
1. Liability of sub-lessor for GST on electricity charges.
2. Consideration of electricity charges as recovered amount or pure agent.
3. Effective date of advance ruling.

Analysis:

Liability of sub-lessor for GST on electricity charges:
The applicant sought an advance ruling on whether the sub-lessor is liable to charge and pay GST on electricity charges collected from the tenant. The applicant argued that the electricity charges paid were merely a reimbursement of expenses on an actual basis and that the sub-lessor acted as a 'pure agent'. The sub-lessor contended that the electricity charges were incidental charges to the rent and hence liable for GST. The Authority considered the relevant provisions of the CGST Act and GGST Act and noted that the applicant was not the supplier of the service and the ruling sought did not pertain to input tax credit. Consequently, the Authority held that the applicant lacked standing to seek a ruling in this case, and thus rejected the application.

Consideration of electricity charges as recovered amount or pure agent:
The applicant also inquired whether the electricity charges paid by the sub-lessor to the electricity supplier, based on sub-meters from different tenants, could be considered as amount recovered as a pure agent of the tenant. The Authority emphasized that the ruling sought did not relate to the admissibility of input tax credit for the supply received by the applicant. As per the provisions of the CGST Act, the ruling was limited to specific issues listed in Section 97(2). Since the applicant was not the supplier of the service and the ruling did not concern input tax credit, the Authority determined that the applicant did not have the necessary standing to seek a ruling on this matter.

Effective date of advance ruling:
Lastly, the applicant questioned whether the advance ruling could be effective from the beginning of the rent agreement date. However, the Authority's decision to reject the application under Section 98(2) of the CGST Act, 2017, along with Sections 95(a), (c), and 103, implied that the ruling was not granted. Therefore, the question regarding the effective date of the advance ruling became moot in light of the rejection of the application.

In conclusion, the Authority rejected the applicant's request for an advance ruling on the grounds that the applicant lacked standing to seek a ruling in the present case, as the issues raised did not fall within the scope of the provisions governing advance rulings under the CGST Act, 2017.